New Zealand has instead agreed to have the Test series in their own backyard. However, PCB will remain as the official host of the series that will be played in Nov-Dec this year.
The decision to relocate the series and split it into two phases was taken after a terrorist attack on the Sri Lankan team's bus in Lahore last March.
The attacks, which killed eight people and wounded seven Sri Lankan players and an assistant coach, confirmed Pakistan's status as the pariah of international cricket.
Early this summer, Pakistan successfully hosted a one-day series against Australia in Dubai and Abu Dhabi. The PCB is now planning to host the Aussies for three Tests in England next summer.